Palm Oil Futures Fluctuate in Anticipation of Market Signals

JAKARTA: On Thursday, Malaysian palm oil futures experienced narrow trading fluctuations as market participants looked for definitive signals. Support from competing vegetable oils provided some lift, but a robust ringgit and increasing production volumes acted as constraints on potential gains.

The benchmark palm oil contract, set for July delivery on the Bursa Malaysia Derivatives Exchange, declined by 14 ringgit, equivalent to a 0.35% decrease, settling at 4,023 ringgit ($917.45) per metric ton by midday.

During the initial trading hours, the contract price varied between 4,005 ringgit and 4,054 ringgit per ton, following a closing price of 4,037 ringgit in the previous trading session.

A Kuala Lumpur-based trader commented, “Currently, crude palm oil futures are consolidating, influenced by positive demand updates from India and heightened production figures from the Malaysian Palm Oil Association.” The trader also noted that the market is awaiting additional guiding cues.

However, the trader cautioned that escalating production levels, coupled with a stronger Malaysian ringgit—the currency in which the contracts are traded—might impede further price escalations.

The ringgit appreciated by 0.07% against the US dollar, which could diminish the contract’s attractiveness to holders of foreign currencies.

On the Dalian exchange, the most active soyoil contract saw an increase of 0.56%, while the palm oil contract rose by 0.86%.

Soyoil prices on the Chicago Board of Trade (CBOT) also edged higher, increasing by 0.54%.

Palm oil prices generally mirror the price trends of other edible oils due to their competition in the global vegetable oil market.

India has reportedly increased its palm oil procurement after a five-month lull. Price adjustments have made palm oil more competitive compared to soyoil, which has spurred refiners to place orders to replenish their reserves, according to several dealers.

Technical analysis suggests that palm oil prices may potentially retrace to a range between 3,929 ringgit and 3,968 ringgit per metric ton, following its inability to surpass the resistance level at 4,072 ringgit.